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Retirement And Equity Release

Looking for equity release in retirement? Here’s all the details you need to know about the process, along with where to find expert support to help you reach your goals.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 13, 2022

If you’re interested in accessing extra funds in retirement, an equity release scheme can be a really useful solution, allowing you to borrow against money you’ve got tied up in your home.

This guide covers everything you need to know about using this type of finance if you’re retired. You’ll also find out how this tax-free money impacts your State Pension, and – where to get expert support to seek out the best deals.

Keep reading for all the essential details or click on a link below to jump straight to a specific section…

Can you get equity release if you’re a pensioner?

Yes! In fact, you can only qualify for the majority of equity release schemes if you’re over the age of 55. Most of these arrangements are designed with pensioners and retirees in mind.

Equity Release Calculator

Take a look at our easy to use calculator and find out how much equity you may be able to release from your property:

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Equity Release Calculator

You can use our equity release calculator to work out how much capital you can release from your home. Simply enter your age and the property’s value and the tool will do the rest.


Estimate if you're unsure
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For joint applications the amount you can release is based on the age of the youngest applicant
years old

Maximum Equity you could release:

The amount is of your homes value, the maximum most borrowers your age can release.

Get Started with an Equity Release Specialist and find out exactly how much you could release.

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Do you have to be retired to get equity release?

Not necessarily. With most products, you just need to be over 55. So, there’s no strict rule that you have to be in retirement. But, you may have to be over a certain age and meet other requirements.

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What are the benefits of equity release in retirement?

Deciding to go down this route comes with some unique advantages. Here are some examples of how you could benefit from equity release during your retirement:

  • Supplement living expenses – with rising prices and the cost of living going up, releasing money from your home can be a helpful way to cope with the changes. It also means you don’t have to lower the standard of living that you’re used to.
  • Big purchases – you might want to access a large sum for a once-in-a-lifetime trip or to buy something that’s important to you.
  • Pay off debts – it can sometimes make financial sense to use equity to pay down existing loans, debts, or credit cards.
  • Help your family – you can use these funds to support someone in your family. Perhaps for a wedding, further education, or even a gifted deposit so they can afford their own home.
  • Home renovations – using this money can be an efficient way to carry out repairs or renovations to your house, which could also increase your home’s value.
  • Tax-free – this is a great way to improve your finances without an added tax burden.

How to release equity in retirement

The exact process will depend on your circumstances and goals. But, there are some universal steps to make this all work in the most straightforward way possible:

Step One: Gather your documents and speak with an expert

Firstly, it’s important to get all your relevant information to hand. This will include basic documents such as photo ID (passport, driving license), proof of address (utility bill). And, details of your retirement finances, or current income if you’re still working. It’s also worth having a clear plan about what you’re looking to achieve with the equity release.

Once you have all your documents and an idea about what you want your outcome to be, you should discuss everything with a skilled broker. This area of finance requires expert advice, because without it, you’ll struggle to access most of the available products.

Step Two: Download your credit reports

After you get the ball rolling and have initial discussions, it’s well worth downloading all your credit reports. You may not have had to access them for a while, so it’s crucial to make sure everything is up to date. Double-check there are no mistakes that could hinder your application.

Discussing your credit score and getting your broker to help evaluate the reports is highly recommended. They’ll be able to show you what lenders will and won’t accept. With their industry knowledge, they can also help to guide you in any areas that need improvement.

Step Three: Home valuation and accessing funds

With your application set up and ready to go, your broker will introduce you to the most suitable lender. If you’re happy with what’s on offer, the next step will be a home valuation.

After the valuation has taken place, you’ll get a final confirmation detailing how much you’re able to borrow. An offer letter will be sent to your solicitor and your broker. If you’re happy with everything, your solicitor will complete the necessary legal documents and then your funds will be released.

This whole process can often be completed in around 8 weeks after your application is submitted. So, if you’d like to get started, just make an enquiry. We’ll introduce you to a specialist broker for a free initial discussion.

What equity release schemes are available?

Depending on your circumstances, there are plenty of schemes you might want to explore in retirement. Here’s an overview of some popular options on the market:

  • Just Retirement: this equity release scheme comes from an established firm. One that focuses entirely on financial solutions for retirees. The lifetime mortgages and equity release options aren’t sold directly to customers. So, if you want to access their deals, you have to do so through a specialist adviser.
  • Key Later Life Finance: another company whose complete product range is aimed at customers looking for pension and retirement solutions. You don’t need to be in retirement to qualify for the Key equity release product. But, you must be over 55 and have a property worth at least £70,000 to unlock tax-free funds from your home.
  • Pure Retirement: the equity release options on offer here also require you to apply through a broker. This allows Pure Retirement to be confident that you’ve received sound advice, making sure this is the right financial solution for your needs.
  • Retirement Advantage: this is no longer available as the company rebranded to Canada Life. With their ‘Capital Select’ equity release option, you can pay back up to 10% of the loan amount each year. There’s even a 3% cashback option to help with set up fees, but this will affect your interest rate.

If you want to access the full range of products available to you, it’s best to discuss your situation and circumstances with an expert broker. Many of the top options on the market are not even advertised, and most need an introduction from a trusted adviser.

Does equity release affect benefits and government support?

It can, depending on the benefits and support you currently receive, for example:

  • Receiving a big lump sum could tip you over the savings limit for some means-tested benefits.
  • When your entitlements to government support are tested, your equity release funds could be factored into your income or total net worth calculations.
  • Depending on where you live, the funds could affect any council tax discounts you get.
  • Any funding you receive for care services could also be impacted.

Before you make any concrete decisions, it’s best to discuss your circumstances with your broker. This way, they’ll be able to direct you on how these funds could make a difference to any financial support you receive from the government during retirement.

How does equity release affect your state pension?

There would be no changes to your State Pension if you decide to release equity in retirement. But, if you receive Pension Credit, this could be affected because it’s a means-tested benefit.

Other important factors for pensioners to be aware of

Because you’ll often be using a lifetime mortgage or home reversion plan to access equity and release funds, there are some specific points to keep in mind:

  • Loan interest: the interest rate on the amount you borrow can be higher than a regular mortgage, and it will compound over time. The house has to be sold to repay the accrued debt once you pass on or move into permanent care.
  • Early repayment charges: some lenders will have fees or limits on how much you can overpay. This could become relevant if you choose to move house and downsize at a later stage.
  • Arrangement fees: there can be a wide variety of set up fees from lenders. In most cases, the amounts can range from £1,000 – £3,000. So, always factor in these added costs when discussing your equity release options.
  • Moving out: a common misconception is that in the worst-case scenario you’d be forced to leave your home. Most responsible lenders will guarantee that you can stay in your house for as long as you need. The property will only be sold after you die or move into long-term care. You may have a smaller inheritance to pass down but you’re not at risk of losing your home.

Speak with a retirement expert

If you’re approaching retirement or already retired, it’s always helpful to keep your finances as straightforward as possible. Opting for equity release provides you with some really useful benefits. But, expert advice is a great help throughout the process.

We offer a free broker-matching service. This simply means we’ll do a quick assessment of your circumstances, and then pair you up with a broker who’ll be able to assist with your financial goals in retirement.

Just call 0808 189 2301 or make an enquiry. We’ll set up a free, no obligation chat between you and an expert broker. One who has existing relationships with lenders, allowing them to introduce you to the right one for your situation.

FAQs

What’s the difference between a retirement mortgage and equity release?

With a retirement interest-only mortgage, you’d have to repay the interest on the loan each month. Whereas for equity release, you can choose to roll-up the interest. This means paying it all at the end, resulting in no monthly payments.

Can I sell my house if I have equity release?

You can. But, the exact process of selling your home will depend on the structure of your loan. And, whether you’re using a lifetime mortgage or home reversion plan. Some lenders will let you move your mortgage to a new property. But, if you’re downsizing, you might have to pay back some of the mortgage early, which can lead to extra fees.

Is equity release a good idea in retirement?

Depending on your circumstances, it can be an excellent solution to help you in a variety of scenarios. But, it’s best to discuss your circumstances and goals with an expert broker to make sure it’s the right course of action for what you need.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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